Markets tune out the noise, lean into growth, AI, and upcoming earnings

Buenos Dias! Stocks around the world ended higher yesterday — and here at home this is how investors reacted to the weekend news. The Dow rallied hard – rising 595 pts or 1.2%, the S&P up 44 pts or 0.65%, the Nasdaq rose 160 pts or 0.7%, the Russell added 40 pts or 1.6%, the Transports gained 202 pts or 1.15%, the Equal Weight S&P up 70 pts or 0.9% while the Mag 7 gained 296 pts or 0.9%.

This even in the wake of the dramatic capture of “Nicky” and his wife, Celia. Many expected the headlines around Venezuela to spark a surge in geopolitical risk and trigger a risk-off reaction across global markets. That never happened. Apparently he is not as important as he thinks he is.

Instead, investors shrugged. The prevailing view is that Nicky’s sudden trip to the Brooklyn Detention Center has little to no relevance for developed markets or global capital flows. From a market perspective, it simply doesn’t matter.

What is interesting, however, is that it does matter in the world of prediction markets. For those unfamiliar, Polymarket is an online prediction market where participants use cryptocurrency to wager on the probability of real-world outcomes – think politics, economics, markets, sports, crypto, and geopolitics.

Now, news broke that a trader on Polymarket placed a $32,000 bet that Nicky would be out by the end of January — and they hit it big. That wager paid $436,760 on Saturday morning, delivering a 1,265% return, or 13.65 x’s the original investment.

Now, just because the markets rallied does not mean there aren’t consequences. The corrupt networks, drug trade, and human-trafficking pipelines tied to his regime are undoubtedly feeling real pressure. And the new acting President (and I caution even using that word) — Delcy Rodríguez is feeling it as well. Her initial response was predictable: loud condemnation of U.S. action. But that tone shifted quickly, giving way to diplomatic language about “respectful relations” and “cooperation” around an agenda of shared development. Let’s see how that goes. The ball is in her court – the question is what happens next.

Meanwhile, investors, traders, and algos chose to focus elsewhere. Their attention is firmly fixed on CES — the Consumer Electronics Show in Las Vegas, which runs through January 9th.

And it’s the expectations around what we will learn at CES that lit the fuse (as if we needed to light the fuse) in the TECH space. The buzz is centered on practical applications of AI, meaningful advances in robotics — especially humanoid robots — the rapid expansion of digital health technology with a strong focus on longevity, more deeply integrated smart-home ecosystems, and next-generation automotive technology.

All the players are using CES as a launchpad to unveil new chips, new tech, new applications designed for deeper AI integration. And on that note, NVIDIA did not disappoint. Jensen Huang introduced Rubin, a platform positioned to power the next generation of AI computing and investors hung on every word. This morning, NVIDIA is trading up $1.50 at $189.40.

On the economic front, we got the December ISM Manufacturing report, and at first glance it looked weak. The headline number came in at 47.9, below an already soft expectation of 48.4 — firmly in contraction territory.

Ordinarily, that would be viewed as a negative. But a deeper look tells a more nuanced story. The Prices Paid component also eased, coming in at 58.5, signaling that input costs are NOT accelerating at a faster pace. In other words, weaker growth was offset by easing price pressure. So, for now, one cancelled the other — at least for yesterday. Tomorrow? As always…could be a very different story.

In the end - the data didn’t change the narrative — it reinforced it. Slower growth, cooling inflation pressures, and a market is still waiting for the next Fed move. There is only a 16% chance now of a January cut and a 35% chance of a March cut.

Eco data today is all about the ISM Services part of our economy and that expected number, 52.9, remains well into the expansion zone. Tomorrow brings us the December ADP Employment report and that is expected to show a gain of 50k jobs. We will also get the ISM Services Prices Paid component as well as the November JOLTS report…which I would caution you to take it with a grain of salt.

Thursday brings us the December Challenger Job Cuts report while Friday brings us the all-important December NFP report, and that’s the data point investors will be laser-focused on. Expectations call for a gain of 65k new jobs, Average Hourly Earnings growth of +0.3% m/m and +3.6% y/y and an Unemployment rate of 4.5% DOWN from 4.6% - capisce?

That wage number matters and here’s why - At 3.6%, wage growth is running ahead of inflation, which currently sits at 2.8%. The implication is straightforward: workers are gaining purchasing power. Paychecks are growing faster than prices are rising. Period!

Now bonds rose – the TLT up 0.5% while the TLH gained 0.4% and that sent yields a bit lower. The 10 yr is now yielding 4.17% while the 30 yr is yielding 4.87%. Nothing new to see here.

Oil – as discussed had little reaction to yesterday’s news…Why? Because Venezuela is not a big producer by any sense of the word, so it had no effect on oil at all. Now, it might make China and Iran a bit nervous – but that’s a different story.

WTI is trading at $58.47 and remains below trendline resistance at $58.60. Should we push up and thru – then we could see oil rally to about $60 – not much more…Remember – we are still in the middle of an oil glut and that needs to work itself out. OPEC+ is still producing at a healthy rate, and the US is producing at all time highs…so supply is not an issue at all. Support appears to be at the $55 level.

Gold did push higher yesterday and that does make sense - it is the ultimate ‘safety trade’ and the news over the weekend only supports higher gold (and other precious metals) prices. Yesterday it rallied by $116 or 2.7% and this morning it is up another $11 or 0.3% at $4,461/oz but still below the all-time high of $4,550.

The VIX did nothing and that suggests that investors are ‘complacent’…the index at 15.14 remains well below all 3 trendline resistances at 16.96, 17.31 and 19.02. We would have to see it break above 19.02 (which would be a 25% move) – before it begins to suggest a change in the ‘fear trade’.

European markets which closed higher yesterday are mixed today…. Only the Euro Stoxx and France are lower – down 0.25% and 0.4% respectively. The UK is up 0.7%, Italy up 0.3%, Germany is up 0.25% while Germany is up 0.15%. There is no significant economic news.

US Futures are also mixed – the Dow down 75, the S&P’s down 1, the Nasdaq is up 25 and the Russell is down 7.

The S&P 500 closed at 6,902, up 44 points, and remains just below its 2025 high of 6,945. Trendline support sits near 6,810, and my sense is that we’ll continue to churn until we get Friday’s NFP report, followed closely by the start of earnings season next week.

And there’s a lot to consider in the weeks ahead — much of it will hinge on how earnings season starts and, more importantly, what forward guidance looks like. Expectations are already elevated.

In addition – we are excited about the effects of the new federal lower ‘effective’ tax tables, the “big, beautiful bill,” no tax on tips, and the expected surge in tax refunds that are coming.

But remember — this is a midterm election year. That means noise, plenty of it. Most headlines will be designed to provoke reaction, not insight, so stay disciplined. Stay focused, and don’t get drawn in the fray.

An Italian classic – Sausage, peppers and onions

This is always a family favorite, and it feeds the WHOLE family and then some.

For this you need – 6 Italian Sweet Sausages (you can use Hot if you prefer), garlic, red and green bell peppers – cored and sliced, 2 large Onions – peeled and sliced, s&p & olive oil.

Now this dish is best if you grill the sausages – if not – you can roast them in a hot oven.

So, for me, I’m lighting the grill to get it nice and hot.

In a large sauté pan – add the olive oil and then add in the sliced garlic, sliced bell peppers and onions. Sauté for 15 mins – giving them time to soften and become sweet.

Now – take your sausage and put it on the grill – careful NOT to burn. Turn to make sure you grill it all around. Once done – slice the sausages into bite size pieces and add to the peppers and onions.

Now from here you can do a couple of things….

Just serve with warm Italian bread or

You can boil up a pound of Rigatoni and then mix it all together and add a handful of grated parmegiana cheese…. OMG – so good! Either way it is great for watching a Sunday football game, especially if you are having company. Trust me, put it over the pasta – you can thank me later!